Is it time to break ??

Hi all,

I'm in a little bit of a pickle at the moment. I have fixed loans up for review early next year. One is 7.35% due in March, the other is 9.45% due in June. I asked the bank for break costs about 6 months ago when the madness was going on and for both was quoted about $25,000 which I was prepared to let slide at that stage.

It is looking like rates are heading north again and I'm getting itchy feet - should I break now and move them both plus pay costs which would be much lower now. Or should I take the punt that I would probably be able to refinance at lower rates anyway when they roll over ?

I'm just looking forward to some extra CF in 2010 and want to maximise it !
I'm breaking out of 2 fixed loans right now as this will result in a huge equity release. Breaks costs are half what I was quoted 6 months ago.
Rob, can you explain how breaking a fixed loan will result in an equity release ?

Bought property in 2007 with a fixed rate loan of $173,600 (80% LVR). Property now valued at $305,000.
Current lender won't (or can't) lend me any more against this property, so no option but to break and re-finance with another lender.
Doing so (assuming I maintain 80% LVR and don't push to 90% with LMI) leaves me with $65,000 in hand after paying out the $173,600 loan and $6,000 break costs.

I'd be tempted to wait at least a little (maybe few weeks), some rates have jumped by 25bps+ in the last week - I'd see where they settle ?

The rate at which my re-finance is going, it will be a month before this one settles and a few weeks before a second one goes "unconditional". I'm not telling them to "hurry up" any more :)
Yes I have been waiting for the interest rises before breaking fixed loan at 7.59% due August next year. I am leaving it as late as possible but I need to release my PPOR so I can borrow against it for other ventures. I will be phoning the bank next week to get a quote which will be valid for 10 days.
It is looking like rates are heading north again and I'm getting itchy feet
IMO if you are not going to refinance , sell etc you should leave the loans as they are.
when the fixed terms expire I'd stay variable
I pay around 5.5% variable so even if interest rates go up by 1% in that period it still doesn't make sense to fix.
Depends on what u want to use the money for if u break....doing the crystal ball stuff on interest rates is a waste of time in my books. Will they go up, will they go down...By how much, over what period of time? Who knows, certainly not Kevin Rudd.
Still I understand that sometimes people want to know how much they are going to pay, so they fix. But apart from that, I can't see a reason to fix. Most times it's the banks that win with fixing rates as so many people later break and the banks make a lot on the break-costs.